Mechel Biggest Micex Gainer on State Bank Cash Request for Elga

By Ksenia Galouchko -
Mar 18, 2013

OAO Mechel (MTLR), the second-most
indebted Russian mining company, climbed the most on the
benchmark stock gauge as investors bet a request for more state
financial assistance will bolster its finances.

Mechel increased as much as 3.7 percent before trading up
3.1 percent at 166.40 rubles by 10:22 a.m. in Moscow. The amount
of shares traded was 512,188, equivalent to about 68 percent of
the three-month average. The Micex tumbled 1.9 percent to
1,466.42.

Mechel is seeking financing for its Elga coal field from
state development bank Vnesheconombank, VEB spokeswoman
Ekaterina Grishkovets said March 15. The company, fined in 2008
by the government for price violations, won an extension on
loans from state lender VTB Group last year, while OAO
Gazprombank, a unit of the gas export monopoly, increased the
duration of its credit lines.

“Given the political support for large-scale projects in
Russia’s Far East, we think Mechel certainly has a chance of
receiving funding for Elga from VEB, but the potential terms and
amount of the loan remain unclear at this stage,” Sberbank CIB
analysts said in an e-mailed note today. “Should Mechel succeed
in obtaining non-recourse funding, it would materially improve
its medium-term cash flow profile and act as a positive event
for the stock, in our view.”